AIG Life has unveiled the capital portfolio bond, a unit-linked bond enabling IFAs to tailor investment portfolios to different risk profiles and investment objectives.
Investors get access to a range of AIG Life guaranteed funds, tracker funds and its cash fund. Fifty-seven external funds from managers such as Aberdeen, Fidelity and Gartmore are also available. These cover a range of sectors including technology, property, global utilities and UK blue chip funds.
One advantage for investors is that they can switch between the funds at any time without charge. This enables changes to be made to investors' portfolios if their personal circumstances or stockmarket conditions alter and a more cautious or aggressive risk profile is required.
The bond allows investors and their IFAs to choose the charging structure of the bond. There are three options enhanced allocation, total allocation and penalty free. The differences between them mean that the higher the allocation rates, the more likely it is that an initial charge and early encashment charge will be made.
The bond differs from competitors such as Friends Provident in that it focuses on externally managed funds plus its own guaranteed and tracker funds. Guaranteed funds are proving popular as investors are erring on the side of caution and AIG Life's funds allow investors to choose the level of capital protection and the geographic region. However, some investors could feel overwhelmed by the number of funds available through this bond.
According to Standard & Poor's, out of 46 AIG Life guaranteed funds that have three-year past performance, 21 are top quartile and 25 are bottom quartile based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to September 24, 2001.